Newsletter – November 2011

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The Conscious Business


Hi everyone,

Many modern businesses operate to a business model which employs any number of retail or service outlets. Some businesses have gone further and packaged up their business model and branding into a complete offering that is then marketed and sold as a franchise.

Some entrepreneurs operate by creating business and brand concepts and their whole business is in the selling of franchises to those who want a business they can walk straight into and operate under a consumer recognised brand. Some businesses operate a hybrid model of both franchises and Head Office controlled outlets.

Business franchises are a growth industry in Australia. The refugee phenomenon and the economic migration schemes have resulted in some businesses creating brand concepts such as coffee house chains, doughnut and burger outlets, cleaning and property maintenance chains, to name a few. Each franchise outlet effectively becomes an extension of the core brand of the company concerned.

I distinguish here between economic migrants and refugees. Economic migrants are often wealthy and well educated regardless of their cultural background. Refugees often have lower education and wealth in their background, and additionally have to deal with basic survival issues on arrival, as well as trauma either from persecution in their homeland, or from the journey, or the process to be accepted into Australia. Economic migrants are the focus of the group being referred here in this article.

A key risk to some business chains in terms of brand value and customer perceptions comes from this increasingly common business practice. The franchising of a successful brand often is that where the original business outlet traditionally was developed through growth strategies inside a company that directly controlled and staffed each outlet.

A key way of funding growth and footprint in key new suburbs has been this franchising concept. The internal capital and operating investment to keep pace with establishing a presence in key new communities would be beyond the resources of many well known business chains. Franchising offers many such traditional organisations a new way to expand and to leverage their brand and business model.

A key risk exists for the controlling entity of the franchised brand, or the business with a large number of self managed and staffed outlets. This risk is the outlet or franchise that goes feral and stops representing the quality and customer service excellence that is often a goodwill factor in the ability to sell franchises, or continue company expansion in the first place.

In Australia it has been reported that there are some franchising businesses that actually do not care much about what happens at the franchise location once it has been sold and setup. Such franchising businesses are typically geared to sell their franchise as the sole reason to be in business, and brand loyalty and adherence are secondary matters.

Apparently franchising laws are not protective of franchisees in Australia and there have been a large number of bad experiences in Australia where franchises have failed, and/or repossessions have taken place and franchisees have lost their entire investment as a result. Predatory controlling companies who stress and then repossess their on sold franchise outlet are not unknown in Australia.

Putting these types of experiences and dynamics aside then a well resourced, considered and supportive franchising model can still come to grief and cause problems for both the franchiser and franchisee. One key problem is the “emotional buyer” who typically has never run a small owner operator business before, but may have recently retired from an employee role, resigned in disillusionment from their corporate job, or received an inheritance whilst in an employee role.

Such a potential franchiser may engage a business broker or conduct their own analysis of what or which franchise to enter. Evidence has revealed that the emotional buyer may simply engage a business broker and put all faith into these intermediaries but not really understand the nature of the business they are buying into.

Worse still is the fact that many emotional buyers are not actually business minded people. As I go about my Corporate Consulting and Business Coaching work I find quite a few disillusioned executives or middle management types who avoid the pain of their jobs by splitting off into an idealised daydream of owning a franchise or business outlet where they can gain some kind of control of their lives.

Some such people eventually suffer a brain snap in their corporate suffering and make an impulsive decision to activate that dream.  For many that dream will turn into a nightmare over time as the harsh reality of running a small franchise based business starts to render that idealised dream a false reality.

The bottom line is that some people simply should not ever attempt to run a small business regardless of its type or construct, franchised or not. Some people do not have the mental skills and intelligence to run a disciplined business, whilst others who are mentally sharp fall down in personality and the key emotional intelligence areas.

Such people normally struggle in defining and creating a positive customer experience, and building loyal customer bonds. This is true of all cultures and no one group is highlighted as it is a global truth and cross-cultural.

There is also a cultural context here as well. Many Australian franchises are bought by economic migrants who use the franchised business as a vehicle for migration to this country. They may be desirous of making a profit in such a business but it may also be a means to an end and so their intentions may not be fully focussed on the business. They may not have the “heart” or passion for the business in the way that some other franchisees do when they invest considerable monies into such an investment.

The other cultural context that is relevant is both the cultural and business values and “mores” that apply in the country of origin from where the economic migrant originated. Experience has shown that a business person from another culture will consciously and unconsciously have adopted many beliefs, attitudes and values in that native country as they honed their business skills in their initial business career.

Leadership and business studies have consistently found that these beliefs, attitudes and values will inform that economic migrant as to how to approach their new business in another country. Business success has been shown to require significant adjustment of these beliefs, attitudes and values when operating in some foreign cultures.

The small business owner who migrates to another country needs to situationally adapt their experience and informing beliefs, attitudes and values to conform and fit in with those of the destination country and the corresponding business environment. There has been evidence that this has not occurred in the Australian experience of economic migrants entering Australia under the vehicle of starting life with a franchised or purchased small business.

Business studies have shown that some foreign cultures have a close alignment of beliefs, attitudes, and values to that of Australia. The studies show that the degree of divergence in these core beliefs, attitudes and values between the two cultures has a direct link to business success or failure. The degree of such a gap predicts the risk and eventual realisation of business failure.

The Australian experience has shown that family and “heart” cultures where sacrifice and hard work are accepted and practiced often make a successful transition in business practice. The Vietnamese experience in Australia has borne this out via their economic and political refugees over the 1970 to 1980’s waves of migration. They were mainly refugees but have surmounted the odds to largely become successful business owners in many instances due to their value systems and cultural/family frameworks.

The other end of the scale has shown that some other cultures who have a sharp “head” for business, such as the Chinese and the South African continent business migrants, who commonly migrate to Australia, have encountered some assimilation struggles and business issues, possibly due to their own social heritage. Both these cultures espouse hard work and hard bargaining in business, but both cultures also have a culture more focussed on “me” rather than “we” and so espouse a more “win-lose” approach to business.

The concept of “win-win” which is touted in Australia as a “fair go” is not often understood, embraced or respected by some other cultures. Both the Chinese and South African continent cultures have a large social divide of winners and losers based on economic and racial lines. Sociologists have noted that domination of resources and people by another group within a society can foster a sense of entitlement, self-aggrandisement, Narcissism and lack of empathy for others. This does not apply to all individuals from these cultures however.

Such cultures may minimise emotional intelligence principles and instead practice hard business tactics and approaches in their dealings with staff, suppliers, and customers. A “win-lose” mindset can result. This can create issues for both the franchiser and franchisee in the Australian business environment.

If a company sells off a franchise to a person or entity whose value systems are not aligned to that of the company ethos then a degree of risk ensues. The same is true if an outlet run by Head Office of a company employs a leader whose value system is divergent to the company ethos. The key task of the Franchiser or Head Office is how to activate the value system of the Franchisee or the outlet leader in accordance to the company values and ethos.

Two problems arise at this point. Firstly the Head Office or the Franchiser may not be skilled in qualifying the Franchisee or outlet leader before they take ownership of the outlet or franchise. Organisations are typically able to do this via personality profiling, IQ, and EQ psychometric systems. This provides a degree of qualification. I recommend and use Extended DISC as a profiling and coaching tool as a starting point for such situations.

This process of qualification of the new entity typically does not occur in franchising models. It is often more an accounting and legal status profiling check performed in most cases in these situations. The human dynamics are often overlooked. My work with franchisees in a business and performance coaching context reveals that the hard questions were never asked around their leadership and customer savvy skills and values.

It is critical that the new incumbent be asked a core question of what business values mean to them. This baseline will reveal the blind-spots, lack of awareness and the degree of divergence between the company ethos and the personal values of the outlet leader or the franchisee. In some cases this should be a red light as it will reveal an outcome where the new franchisee will not be able to represent the value system of the company to the customer. This risk can undermine the entire brand if realised.

The second issue is that where divergence exists in the personal business value system against that of the company then what measures are to be put in place to create alignment. Value systems in humans are deep seated and resistant to change. A coaching framework can assist in the attitudinal space but deeper core values may resist intervention and change. The person may not be a good fit for your franchise or new outlet.

Another indicator to a person who will or will not make it in terms of activating the company values and positive customer experience is to challenge them with the question, “What creative ways do you intend to express our company values as well as your own?”. This question can expose a real problem.

If the person mentally clouds over or is silent then you may have encountered a dependent business personality. This type of personality is often attracted to franchises as the franchise effectively spoon feeds them with all the administration, processes, branding, products and footprint design for their business. They may not have a lot of drive and vision, or be able or willing to activate anything other than what is provided to them.

Such a person may blindly follow the formula of the franchise but emotionally and simply “not get it”. Such persons may interfere also with the formula by tinkering with the overall customer experience in a way that reflects counter-productive values to the business model.

For instance in one famous coffee house chain that jealousy guards its brand and customer experience there exists a franchised outlet in a superb high income suburban location. This outlet is in a high traffic flow location where traffic lights and an intersection see regular pools of people literally standing outside the business every day of the week.

Unfortunately nowadays there are more people on the footpath looking in than customers on the inside looking out. I had used this outlet on and off for over 15 years and so I know their story. The outlet was once a well run, energetic, positive customer experience place to meet. The staff were enthusiastic and the manager was dynamic.

Circumstances saw this manager having to sell and move on. The new manager had a totally different embodiment of a cafe owner/manager as well as a different personal value system. The manager/owner often looked stressed and had a sort of furrowed brow and a scowl a lot of the time. Their social engagement part of the brain seemed not to activate much of the time as shown when he would not give you eye contact when you met inside the store.

We all have a social engagement part of the brain which is responsible for driving our “social brain”. Humans are socially engaged and designed creatures and so in business the ability to socially engage is a critical skill. When a person encounters another human whose facial gestures and embodiment is threatening or perceived as negative then we will tend to withdraw and switch off socially.

A coffee house or cafe is a social engagement space for human beings. When the manager has such embodiment to create the perception in others of a negative meaning, a primitive part of our evolutionary limbic brain activates and instinctively causes us to engage in defensive in unconscious fight or flight mechanisms. This translates to unconsciously avoiding coming back into such a business again.

At the coffee house concerned, I noticed the staff energy started to go downward and become more subdued. It was as if their own interactions while working were discouraged and seen as goofing off. It was as if the Harry Potter Dementors had arrived and sucked out their life force. Good staff started leaving and were replaced by compliant drones who were functionally competent but did not interact with customers.

The franchise was faithfully following the business model at first but as the customer experience died then custom dropped. The business/owner had a poverty consciousness personality and responded by firstly refusing to honour the coffee discount cards which this chain promoted and which was supposed to be a common customer experience across its entire network. This small knockback set the emotional tone for their whole coffee experience.

The manager then cut down on the number of newspapers he bought each day, citing theft as being the reason. Customers who regularly used the coffee shop to read the paper and have a cup of tea or coffee now also found reason to be frustrated by their customer experience when a spare paper could not be found, and soon went elsewhere.

The manager despaired, his brow grew more furrowed and a whirlpool of negativity just deepened. Unfortunately he just did not get it and so was not emotionally intelligent to understand his own folly. In retrospect he was not equipped and should never have taken up the franchise in the first place.

What is worse is that the entire brand now can come under threat by those customers who used and had a negative experience using that outlet. The negative emotional experience will show unconsciously up in future settings when those same customers encounter another outlet of the same brand. They will not consciously understand that it was just the one outlet and not the brand which was compromised.

Our evolutionary brain registers positive and negative emotional impacts and experiences for later recall. This part of the unconscious brain will activate and may unconsciously steer the same customer away from the not just that one outlet, but any such same branded outlet in another location.

This form of negative emotional contagion can then negatively affect other franchisees doing the right thing in their outlet and for the overall brand. This could translate into a loss of business for another one of these coffee chain outlets where other choices exist, such as in a shopping centre.

The lesson here is that rogue outlets and franchises represent a threat to the integrity of the entire brand, and so a conscious business owner will consciously evaluate potential leaders of its new outlets, and introduce evaluation processes to screen out potential franchisees who may not be a good fit for your brand experience.

Corporate Energetics now offers an Extended DISC personality profiling and 360 degree certified assessment process for clients. Contact us or look up our website for more details.

If your business could do with some value creation and setting, emotional intelligence training or coaching then contact Corporate Energetics and lets discuss how we can assist you in your conscious business evolution.

The Wizards of Aus – A Caution for Dorothy on the Yellow Brick Road

In my dealings with Corporate clients I am amazed at how otherwise intelligent people make some very poor investment decisions within their lives. There is a pervasive theme within Australian society now for people to “get rich quick” and one finds messages that you are somehow missing out, or only successful unless you are self empowered by adopting one of these wealth creation, or wider lifestyle success programs.

Just like in the old days we still have circuses which come to town now and again. The elephants have gone, the hairy woman is no longer there, and instead the hype and emotional arousal of the “Big Top” experience has been replaced by a new breed of “performers”. Some of these people are credible, but many are a new form of “clowns”, “tricksters” and “smoke and mirror” illusionists who are trying to secure your emotional commitment, your money, and your belief systems.

Welcome to the “Wizards of Aus”. Just like poor old Dorothy, I have personally seen some naive Dorothy’s conned into becoming part of Wealth Creation schemes, Psychological Transformation programmes, and  Manifestation Reality concepts and workshops. Some have lost fortunes, some have been emotionally and mentally abused and manipulated along the way, and may now be poorer in finance, self image, and health as a result.

Please read my new article titled The Wizards of Aus – A Caution for Dorothy on the Yellow Brick Road. There are quite a few predatory personalities in our society whose business model is nothing more than getting your bum on their seat, and extracting as much money from you via coaching, books, DVD’s, membership to business marketing and concept programmes.

Inform yourself via the tips I use to sort out the wheat from the chaff.

If your business could do with some Emotional Intelligence training or coaching then contact us and lets discuss how we can assist you in your conscious business evolution.

Have a safe and productive month!

Kind Regards,

Richard Boyd

Director, Conscious Business Australia

About Us

Conscious Business Australia is uniquely positioned to assist you in your business journey towards the new economy. We transcend traditional old economy business and leadership coaching and consulting models by bringing to bear our innovative and leading edge Conscious Business Methodology.

Our unique combination of skills, insight, experience and methodologies enable us to stand apart from the tired old coaching and consulting “experiences” that still dominate the business world using old economy constructs and principles.

Come across and try the Conscious Business Australia “experience” which is built on the intersection of psychology, neuroscience, design, project management, marketing, channel design, and digital and physical product design/innovation/imitation philosophies. Have a look at our website for more information, for a much more detailed version of newsletter articles, and for further articles and notifications of other courses and events that we run on a regular basis.

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